Credit cards and Credit costs Guided Notes

Debit Card

Linked to checking account for transactions.

Credit Card

Allows borrowing up to a credit limit.

Prepaid Debit Card

Funds loaded in advance, no credit.

Annual Fees

Yearly charge for credit card usage.

APR

Annual Percentage Rate, average is 24.26%.

Grace Period

Time to pay without incurring interest.

Penalty Fees

Charges for late payments or exceeding limits.

Outstanding Balance

Amount owed after recent payment.

Amortization

Paying off debt in equal installments.

Compound Interest

Interest calculated on principal and previous interest.

Introductory APR

Temporary low interest rate to attract borrowers.

Minimum Interest Charge

Smallest interest charge, typically $1.50.

Transaction Fees

Charges for balance transfers or cash advances.

Over-the-Credit Limit Fee

Charge for exceeding credit limit, typically $29.

Returned Payment Fee

Charge for failed payment, typically $35.

Fixed Interest Rate

Interest rate remains constant over time.

Variable Interest Rate

Interest rate changes based on market conditions.

Credit Limit

Maximum amount you can borrow on a card.

Late Payment Fee

Charge for not paying on time, typically $29.

Cash Advance APR

Higher interest rate for cash withdrawals.

Balance Transfer APR

Rate applied to transferred balances, often higher.

Creditworthiness

Assessment of credit risk based on history.

Rewards Program

Incentives for using a credit card.

Debt Management

Strategies to reduce and control debt.

Interest Fees

Charges for borrowing money on credit.

Payment Due Date

Date by which payment must be made.